June 05, 2006	Monday	Jumadi-ul-Awwal 8, 1427

THE wholesale Karachi commodity markets last week lacked normal trading interest as both, leading brokerage and commercial houses kept to sideline during most of the trading week. They apparently were waiting for a positive impact of the recent steps taken by the government to lower the prices of essential items.

But some others said that it was a pre-budget lull as dealers mostly stayed away from active trading in anticipation of the measures to be announced in the Budget 2006-07 today (June 5). They were also apprehensive about the likely impact of taxation proposals on the commodity trade, including imports.

The pre-budget uncertainty continued to affect the daily trading as leading dealers did not opt for fresh buying on any counter even the essential ones fearing some adverse negative tax proposals, a broker said.

However, floor brokers said that there was no immediate negative impact on the prices which remained stable around previous levels but further increase was checked.

The levy of export duty at the rate of 30 to 35 per cent on the export of pulses is expected to lower the prices in due course once the leading stockholders and importers decide to sell, dealers said adding that for the time being they were holding on to their unsold stocks.

The arrivals from upcountry markets remained slow as leading dealers there held on to their positions until the budget was announced and will decide accordingly in view of the next taxation proposals, they added.

Physical offtake on most of the counters including essential ones was on the lower side of the weekly average which in turn did not allow many changes in the prevailing price structure.

On export front, physical shipments of rice were maintained on the higher side as private sector exporters met their deadlines stipulated in forward deals. Prices remained stable despite the pressure on local supplies owing to a considerable decline in arrivals.

There was no clear indication about the future price outlook of sugar but some brokers hoped larger imports during the last couple of weeks, including from India. These imports are expected to ease the prices from the current high level or may forestall further increase.

The most interesting feature was the easing of prices of some industrial raw materials from their previous inflated levels, partly because of the absence of leading millers, and to some extent due to the steady arrivals from central Sindh markets.

Barring stray price changes here and there, prices of major essential items traded around the previous week’s levels as leading commercial houses were not inclined to take new positions ahead of the Federal Budget.

Normal activity on the markets is expected to be resumed during the post-budget sessions as by that time dealers and brokers would re-fix their trading priorities in the light of taxation proposals in the document, dealers said.

Among essential items, some rice varieties showed modest rise amid reports of fresh export contracts and covering purchases being made by the private sector exporters to meet their shipment deadlines, they said.

Prices of IRRI broken and basmati were leading among them and posted gains ranging from Rs15 to 50, while the fine varieties were firmly held at previous levels amid active local offtake.

IRRI-6 and sela variety on the other hand came in for modest selling followed by reports of steady arrivals from the Sindh markets and a considerable fall in local demand.

Wheat prices were firmly held around previous levels as stockists held on to their positions apparently awaiting the likely positive impact on prices once exports were resumed.

There was a relative quiet on the sugar front but it was pretty difficult to say anything about the ruling prices at the retailer’s end which varied from area to area.

Prices of some major industrial raw materials also remained stable around their previous levels owing to pre-budget considerations. Guarseed, however, was an exception which fell by Rs25 per bag due to a slackened demand.

Cereals on the other hand were actively traded around previous levels amid fears of short supply owing to a considerable decline in arrivals from the upcountry markets.

Oilcakes ruled unchanged for rapeseed amid slow demand, while cottonseed cakes rose further by Rs5 to 10 per bag owing to the pressure on supplies as oil mills held on to their stocks to keep the prices high.—M.A.